Superfund Extension: How Much Is Enough?

420 April 3, 1985 SUPERFUND. EXTENSION HOW MUCH IS ENOUGH
INTRODUCTION The Comprehensive Environmental Response,
Compensation, and Liability Act, commonly called the "Superfund,"
was enacted by Congress in 1980. The Superfund legislation provided 'federal money for the
cleanup of hazardous waste disposal sites that posed an
imminent threat to the public, and where the responsible party
either could not be identified or was insolvent. Congress
authorized the expenditure of $1.6 billion over a five-year period,
expiring Septembe r 30, 19

85. With this date drawing near, a number of legislative
proposals to continue or expand the Superfund program have been
introduced.

All of the proposals to reauthorize the Superfund program call
for increased funding. The Reagan Administration h as asked for
$5.3 billion over the next five years, while a version suppor ted
by a coalition of environmental groups would spend $13.5 billion on
an expanded program. On March 1, the Senate Environment and Public
Works Committee approved S.51, a Superfun d reauthoriza tion that
would earmark an additional $7.5 billion for the program will be
continued-clearly it will-or even whether it will receive new
funding. Rather, the debate concerns the scope and size of the new
Superfund. Environmentalists and their allies in Congress seek a
greatly expanded Superfund, which, they admit ultimately could cost
as much as $40 billion. This new program would go far beyond the
original Superfund concept of cleaning up abandoned hazardous waste
disposal sites that pose an imminent threat to the public's health
or safety. The expanded Superfund would provide funds for a
catch-all of environmental concerns.

It would impose stringent, unrealistic deadlines for site clean
ups, and burden an already beleaguered U.S. chemical ind ustry with
onerous new taxes, and duplicative new reporting requirements I The
central practical question is not whether the program 2 raising the
specter of a direct loss of 30,000 chemical industry jobs, and
threatening up to 1 million more in chemical- r elated activit1es.l
Worse, several of the proposals to expand Superfund call for the
creation of a vast new entitlements program under the guise of
Itvictim compensation,Il and would establish a new right to sue in
federal courts for individuals claiming i njuries resulting from
hazardous waste disposal sites While the basic notion of cleaning
up abandoned hazardous waste dumps has broad support within the
Congress, the public and the Reagan Administration, the enormous
expansion of the program advocated by some has aroused widespread
concern It would be enormously expensive, and the victim's
cornpensation provisions alone could add hundreds of billions of
dollars to federal outlays. Moreover, by moving away from the
original clearly defined goal, an expande d Superfund would inhibit
the ability of the Environmental Protection Agency (EPA) to focus
on the primary objective of the existing law In short, if the
Superfund program is to succeed in fulfilling its original mandate,
it must remain focused, realistic, and free of unnecessarily
burdensome bureaucratic requirements not only may it fail to
achieve its intended goal, but it also could result in a number of
negative consequences case, an ill-conceived law could threaten the
continued existence of the U.S. c h emical industry, jeopardizing
hundreds of thousands of jobs. To ensure that this does not happen,
it is important to understand just what the possible consequences
of some of the proposed Superfund changes really are Otherwise In
the worst VICTIM'S COMPEN S ATION PROVISIONS The Senate Environment
and Public Works Committee version of the Superfund reauthorization
bill, S.51, includes a pilot program to provide victim's
compensation for individuals alleging injuries resulting from
hazardous waste disposal sit e s. Some 30 million would be
allocated for a test which will be limited to five states or
expanded to encompass one state in each of the ten federal regions.
While seemingly restricted in scope, such a lltestll could provide
the legal precedent establishin g a right to compensation similar
to other costly federal entitlements programs.

The proposed victim's compensation pilot program bears close
similarities to the Black Lung program which awards federal
benefits to coal miners afflicted by the respiratory disease.

When Congress created the first Black Lung statute in 1969 it
called only for a relatively modest program, expected to cost a
Statement on Behalf of the Chemical Manufacturers Committee on
Environment and Public Works, United Superfund Authorizati on,
February 27, 1985 Association before the States Senate on -3 total
of between $200 million and $300 million. However, once a federal
right to compensation .was established, it became impossible to
resist the expansionary pressures from individuals who believed
that they, too, were entitled to receive benefits. As a result the
program expanded to the point where in excess of 17 billion has
been expended, and annual costs run at $2 billion. In other words,
the Black Lung program now costs nearly seven ti mes as much each
year as Congress expected to spend on the program during its entire
lifetime.

There is every reason to expect a similar result should even a
limited form of victim's compensation be introduced into law in the
Su perfund reauthorization In short order a modest pilot scheme
would likely expand to encompass a far wider range of claimants
than initially anticipated. And in some of the victimts
compensation schemes, not only are health-related claims eligible
for comp e nsation, but even claims for such hard-to-define
injuries as diminution of property value provisions could create
what would amount to an open-ended entitle ment for claimants, with
little or no control over the ultimate cost So the victim's
compensation F EDERAL CAUSE OF ACTION The extension of "federal
cause of actionft rights to claimants contemplated in some versions
of the victim's compensation provi sions, would complicate this
potentially costly entitlement I Federal cause of action means the
grantin g of the right to sue in federal courts--rather than state
courts--for an alleged injury.

In the case of Superfund, however, this implies far more than
the right to take one's case to a federal court. The full ramifica
tions of the right can be appreciated by considering the provision
extending this right contained in the 1984 version of the Superfund
reauthorization bill, introduced in the House of Representatives
and reported out by the Energy and Commerce Committee.

Title I1 of that bill, according to a n analysis by Michael J
Horowitz, Counsel to the Director of the Office of Management and
Budget: would allow anyone alleging exposure to a hazardous
substance to sue the generator of the hazardous substance or the
transporter who brought the hazardous su b stance to the site, or
the owner or operator of the site for damages causedby such
exposure. Such damages would include medical expenses,
rehabilitation costs, lost income or profit, pain and suffering,
and any economic loss or property damage--including d iminution in
property value 2 Remarks of Michael J. Horowitz, Counsel to the
Director of the Office of Management and Budget, at the U.S.
Chamber of Commerce, Washington, D.C July 19, 1984 p. 3 (emphasis
in original). 4 In short, anx person owning a home l ocated near a
hazardous waste disposal site would have a claim on the federal
government to make good any decline in the market value of his or
her property even if no physical injury had been sustained-and even
if no hazard actually exi.sted In an operat i onal sense, notes the
OMB analysis, this would mean that I a trucker'that carries one
drum of hazardous waste to a site containing thousands of such
drums may be held liable for all the damages recoverable unless it
can affirmatively prove that its waste d id not cause the
damage.If3 Since the mere presence of the waste disposal site could
be responsible for a diminution in property value, it would
therefore be impossible for the trucker to provide such proof, and
the owners therefore could be held strictly liable for maintaining
the value of all homes in the area simply because the company
brought one drum of waste into the dump.

Further complicating the matter is the nature of certain
injuries that could be claimed under most of the federal cause of
action proposals. The diminution of a property's value, or the
extent of pain and suffering, are at best matters of subjective
judgment. Also, courts would be able to assess attorney's fees
creating an incentive for attorneys to inflate their charge Most
import a nt and disturbing is that most of the proposals would
require that the defendant prove that he did not cause the This is
in direct contradiction to the traditions of tort law and to the
fundamental principle that innocence is presumed until guilt is
prove n.

IMPOSITION OF DEADLINES Environmental groups claim that site
cleanups have not moved forward rapidly enough under the Superfund
program. Consequently they argue, Congress should impose strict
deadlines for action on hazardous waste sites. The evidence s
uggests, however, that these complaints are based more on rhetoric
than reality, and should not induce legislators to place
unrealistic time contraints in the reauthorization legislation.

While it is true that the program took some time to gain
momentum, such delays are unexceptional with any new
undertaking.

The pace of activity, however, has steadily increased. According
to OMB, Superfund activity was underway at 753 sites by the end of
1984, with engineering studies in progress at 387 sites and actual
construction6 initiated at 134 sites. By September of 3 4 5 6 Ibid
-9 P. 4.

Ibid 9 Ibid p. 6.

The nature of the construction varies according to the site
site.

Some r I methods are dredging or erecting a shield over-the 5
1985, when the current authorization ends, it is anticipated that
Superfund activity will have begun at 1073 sites, engineering
studies at 494 sites, and construction at 163 sites.

The process of cleaning up hazardous waste disposal sites
requires a great deal of preliminary work. The sites must be
identified, public hearings must be held, engineering studies
completed, and the appropriate remedies identified before cleanup
can begin It is not surprising, therefore, that often a great deal
of time must pass before visible signs of work are evident.

The Administrator of the Environmental Protection Agency EPA),
Lee Thomas, anticipates that by EY 1990 engineering studies will
have been initiated at more than 1,400 Superfund sites, and that
actual construction will be underway or completed at 900 In
addition, he expects that the agency will have undertaken emergency
cleanup measures at more than 1,700 sites to address immediate
threats to human health or to the environment USING SUPERE"D FOR
OTHER ENVIRONMENTAL PROBLEMS One of the most dis t urbing aspects
of the current Superfund debate is the pressure from some
environmental groups to expand the Superfund umbrella to tackle a
number of environmental problems that clearly are outside the law's
original intent. Supporters of this change cite such activities as
cleaning up abandoned mining sites, rehabilitating large aquifers
that may have been polluted by pesticides, and treating dumps not
classified as hazardous by the EPA.

While some of these environmental concerns certainly warrant
attentio n, they do not fall within the purview of the original
Superfund concept. If the program were expanded to include them it
could reduce Superfund's focus on the more immediate, pressing need
to deal with those abandoned hazardous waste disposal sites that
pose an imminent threat to the public's health.

It was this need to concentrate on the program's principal
objective that led to the creation of a National Priorities List of
Superfund sites.

Indeed, Congress,went so far as to exempt certain pollutants
such as pesticides, from inclusion in the Superfund program in
recognition of the need to concentrate on its primary goal.

In addition to diffusing the program's focus, the addition of
new goals easily could cause the cost of Superfund to
skyrocket.

Proponents of expansion do not deny this.

Congress by a coalition of environmental groups placed the long
term cost of widening Superfund's jurisdiction at $40 billion.

But even that figure probably understates the cost. For example
just one new area suggested last year--the treatment of leaking
underground storage tanks at gasoline filling stations-was given a
potential price tag in excess of $10 billion. And much of this
expenditure would be unnecessary, since most oil companies a r e
already replacing old, leaking tanks. When other suggested areas of
expansion are included, such as the rehabilitation of local A
letter sent to 6 waste water treatment facilities, it becomes
evident that the total cost of Superfund could easily and qui ckly
rise to enormous levels.

NEW REPORTING REQUIREMENTS Under S.51, new reporting
requirements would be imposed on the chemical industry the state,
federal, and local governments concerning the use storage, and
spills of any substances that contain more t han 1 percent
hazardous materials requirements would be companies employing fewer
than 10 people and those with less than 6000 kilograms of hazardous
substances in storage A key point about this requirement is that it
covers hazardous substances, not just hazardous wastes So the scope
of the rule would be far wider than hazardous waste disposal sites
Companies would have to file reports with The only firms exempt
from.the Chemical companies already have extensive reporting
responsi bilities at the state, l o cal, and federal level., The
addition of these new and onerous reporting requirements would add
further to the costly paperwork burden, with little or no
corresponding benefit to the public burdensome for small and
medium-sized firms--they could have to a ccount for thousands of
substances in minute detail The requirements would be particularly
NEW TAXES TO FINANCE SUPERFUND All proposals for the
reauthorization of Superfund activities call for increased spending
and for new taxes to finance it.

The Reagan Administration's proposal contains a revenue formula
whereby one-third of the funds would be generated by a tax on
petrochemical feedstocks, with the balance coming primarily from a
tax on wastes. Some additional funding would be raised through
fines and from interest on Superfund payments.

New taxes on petrochemical firms at this time could cause
enormous financial damage to the industry. Over the past several
years, increased foreign competition has steadily reduced the U.S.
petrochemical industry's shar e of the world market. New taxes
would cut this share further. Moreover, beween 1979 and 1983, the
U.S. demand for chemicals decreased by an.average of 2.7 percent
per year. As a consequence, chemical companies are unable to pass
through to their customer s the costs of increased taxes for
Superfund as originally anticipated.

New taxes on chemicals and petrochemical feedstocks would also
make it.easier for foreign competitors, who would not be subject to
the tax, to capture the U.S. domestic market. For exa mple,
polyethylene resins are a staple of the chemical industry
accounting for approximately 13 percent of all petrochemicals
manufactured in 19

83. The proportion of the domestic market for these chemicals
served by U.S. firms, however, has been steadily 7 decreasing since
19

80. Between 1980 and 1983, the value of imports of polyethylene
resins to the U.S. grew from $247.4 million to $468.7 million. In
1984, imports role to $677.5 million. A new tax would give foreign
producers a further competi tive edge.

Inroads by foreign chemical manufacturers are not limited to
polyethylene resins. While the U.S. chemical industry still
maintains an overall positive balance of trade, this trade surplus
has been disappearing steadily in recent years. The positive ba
lance declined from $15 billion to $10.6 billion between 1980 and
1983, and the rate of decline appears to be accelerating.

Compounding the problem is an anticipated surge in the
establishment of large, new petrochemical facilities overseas
especially in nations with large oil and gas resources, such as
Canada and Saudi Arabia. Very likely these nations will subsidize
their pe t rochemical feedstocks in order to gain a foothold in the
market. while this price advantage would be offset in part by
higher transporation costs to reach the U.S. market, the imposi
tion of new taxes on U.S. producers could help to provide a sub
stantial cost advantage for foreign firms.

The Narrow Tax Base for Superfund A major flaw in the tax
provisions intended to finance Superfund is that they are narrowly
based. Although more than three dozen substances' involved in the
petrochemical industry are sub ject to Superfund, only eight
primary petrochemical feedstocks and five organic chemicals would
bear most of the burden of the new tax. According to a survey by
the Chemical Manufacturers Association, this would mean that a
dozen U.S. firms would end up p aying about 70 percent of the tax
on petrochemical feedstocks and only four firms would pay the bulk
of the taxes assessed on waste.

The proposed tax bite, moreover, would exceed the profit margin
prevailing in the chemical industry today. According to ind ustry
estimates, the new feedstock tax would translate into a 4 or 5
percent levy on the value of sales. Yet the pretax profit in the
chemical industry currently averages less than 4 percent of sales
So the tax would cause the industry to operate at a los s unless
prices were raised--eroding firms' competitive posi tion
further.

The Tax on Wastewater Treatment The tax on feedstocks is not the
only element of the various Superfund financing schemes that could
adversely affect the chemical industry. Taxes on wastewater
treatment also could produce undesirable consequences, by imposing
an inequitable burden on a few companies. For example, according to
a survey by the Chemical Manufacturers Association, just one DuPont
Chemical Corporation plant would be asses s ed $47 million in
wastewater 8 taxes. Moreover, the tax is likely to collect far more
revenues than its authors actually intended, placing unnecessary
burdens on the industry. One estimate places collections at $1.8
billion annually, or 80 percent more th an-the $1 billion it was
designed to collect. And by taxing the treatment of hazardous
wastes, the tax.would act as a disincentive to treat them,
encouraging firms to store them instead-exactly the outcome the law
is intended to avoid.

A more logical appro ach would be to tax the storage or disposal
of hazardous wastes. Unlike the current proposal, such an approach
would encourage treatment and discourage storage It would also
create a more equitable basis for assessing the costs of operating
the Superfund p rogram by tying the tax more directly to the
generation of hazardous wastes HOW MUCH IS ENOUGH Perhaps the most
critical question in the whole Superfund debate is how much money
is enough. To a great extent, of course the answer to that question
is a func t ion of the proper goal of the program. To determine
that goal, it is important to differen tiate between the general
goal of cleaning up hazardous waste disposal sites,.and the more
narrow purpose of cleaning up aban doned or inactive hazardous
waste site s where no responsible party can be identified to
distinguish between the problems associated with hazardous wastes
and the far broader issue of pollutants within the environ ment.
And it is also necessary to remember that while Superfund
activities are ad d ressing problems associated with abandoned
hazardous waste sites, private sector sources already intend to
spend large sums of money cleaning up hazardous waste disposal
sites. In fact, while the, Superfund program is expected to spend
some $11.7 billion i n site cleanups during the next five years
private industry is likely to spend an additional $10 billion on
its own programs during the same period It is even more important
for lawmakers If many new activities and purposes are added to
those already incl u ded under Superfund, the amount of money
needed to finance the program could be astronomical. The inclusion
of such activities, as already noted, would not further the
programs basic goal-and could actually detract from it. Moreover,
recent evidence sugge sts that incrasing funding beyond an adequate
level will not accelerate the pace of cleanups.

According to a recently released study by the Office of
Technology Assessment, increased spending may have little if any
effect on the disposal of hazardous waste number of reasons for
this, ranging from-bottlenecks in the The study lists a Office of
Technology Assessment, Superfund Strategy, March 10, 1985. 9 supply
of sufficiently trained technical personnel to, a lack of rational
standards for cleanups. In many cases, all that would result from
spending more money is wasted tax dollars.

Clearly the manner in which money is spent is at least as
importantas the level of spending It would be very unwise to use
Superfund to tackle problems for which it was not designed.

Immediate efforts should be concentrated on hazards that pose an
imminent threat to the public's health or safety. Meanwhile a
long-term solution to the problem of hazardous waste disposal
should be developed. And steps should be taken to develop cle ar
and rational federal standards for waste disposal sites that are
flexible enough to respond to changes in both technology and
economics.

CONCLUSION While Superfund seems certain to be extended, it is
unclear what the nature of the program will be after September 30,
1985.

It is important, therefore, that Congress should not simply add
on new elements to the program, but instead should identify exactly
what it wants to do, given what can be accomplished with the
present state of knowledge problem, as th e OTA study indicates,
will do little to resolve the nation's hazardous waste disposal
problem. Superfund should continue to be used to tackle immediate
threats. Meanwhile Congress should devise a long-term strategy
Merely throwing money at the The tempta t ion to expand the program
into new areas, such as victim's compensation, and non-hazardous
pollutants, should be avoided. Victim's compensation, for instance,
could easily become a new budget-busting entitlements program
costing hundreds of billions of do l lars per year It is also
important that Congress recognize the need to base its funding on
an equitable and realistic formula of fees so no one segment of
U.S.industry is unjustly penalized, nor any segment of the U.S.
economy unreasonably jeopardized. Co ngress must realize that
ill-considered action in this area could result in the direct loss
of as many as 30,000 jobs in the U.S. chemical industry, and could
effect another million jobs in industries involved in
chemical-related activities.

Above all else , Congress should debate Superfund in a rational
manner. To date, discussion has been characterized by reliance more
on rhetoric than on facts dous waste problem and the need for
Congress to secure a healthy environment for future generations
requires sob er and balanced deliberations The potential cost of
the hazar Milton R. Copulos Senior Policy Analyst

Rep. Peter Roskam (R-IL) says it's "a great way to start the day for any conservative who wants to get America back on track."

Sign up to start your free subscription today!

Sorry! Your form had errors:

First name is not validLast name is not validEmail Id is not validZip code is not valid

About The Heritage Foundation

The Heritage Foundation is the nation’s most broadly supported public policy research institute, with hundreds of thousands of individual, foundation and corporate donors. Heritage, founded in February 1973, has a staff of 275 and an annual expense budget of $82.4 million.

Our mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense. Read More